A negative mark on your credit reports can last for seven years or 10 years. If you’re considering paying for credit repair to improve your chances of getting approved for a car loan, your final decision is going to depend on a few different things, including how much work you want to do yourself. Let’s explore some things about credit repair you should consider, including options other than shelling out your hard-earned dollars.
Request Your Credit Reports
First things first: request your credit reports from Equifax, Experian, and TransUnion, the three major reporting bureaus. You’re allowed a free report from each agency every 12 months. Using these reports, you can identify any negative marks that could be harming your credit score.
A bad credit score can affect your ability to get approved for an auto loan. Lenders are hesitant to approve borrowers with bad credit scores because your credit score is based on your history of paying credit accounts.
Even if the negative marks are inaccurate or outdated, it doesn’t matter. If they’re on your credit reports, they lower your credit score. If you find negative marks that you don’t recognize, accounts that were already resolved, or duplicate negative accounts, you can file a dispute to get them removed, which should improve your credit score.
What Is a Credit Dispute?
You can file a dispute to creditors, collection agencies, and the credit reporting bureaus regarding accounts you believe are incorrect.
After you tell them that you’re disputing an account, they have 30 days to investigate and act on it, starting from the day you file the dispute. All three major credit bureaus accept disputes online, as well.
To speed up the process, contact the credit reporting bureau that listed the incorrect information, and the organization that sent the information to the bureau. If you’re going to dispute an account, you must have proof that it's wrong, and send this proof to the collection agency or creditor.
For example, if there’s an outstanding account showing on your reports that you’ve paid, you can dispute it and prove the account is paid with receipts, bank statements, and/or any other supporting documentation.
If the creditor or collection agency disagrees with the dispute, or you don’t provide documentation proving the information is wrong, the investigation can be dropped, and the information remains on your reports.
Credit Repair Companies and How They Work
Credit repair companies, in short, dispute inaccurate accounts for you so you don’t have to. However, you have to provide documentation to the credit repair company so they can have the information removed.
As for the cost, some credit repair companies charge a start-up fee, and most charge a monthly fee to contact creditors to dispute your accounts for you.
Because it can take time and effort to file disputes and follow up on them, a credit repair company can be a good alternative to doing all the work yourself. Credit repair companies can also help arrange deals with the collectors, like pay-for-deletes.
This is an agreement between you and the creditor, stating that you’ll pay the outstanding balance if it’s removed from your credit reports. However, creditors and collection agencies are often hesitant to agree to this.
Credit repair companies also have knowledge of laws including the Fair Credit Billing Act, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act. Using these laws, and understanding what’s fair on your credit reports, they might be able to catch things you didn’t in your initial study of your credit reports.
If you want to enlist the help of a credit repair company, check out our trusted partner for more information on how to get started.
Can I Repair My Credit Myself?
The short answer is yes. You can dispute accounts yourself. If you have the time to contact collection agencies, creditors, and comb through your credit reports for errors, you absolutely can repair your own credit.
If you only have one or two errors and have documentation to prove they’re incorrect, it might be in your best interest to handle it yourself. But if you find yourself buried under multiple errors because someone stole your identity, or you have multiple collection agencies contacting you, a credit repair company could help with the workload.
Other Ways to Improve Credit
If you’ve waded through your credit reports, and everything is accurate but your credit score isn’t the best, a subprime car loan could help. Subprime lenders evaluate more than your credit score to determine an auto loan approval. An installment loan like this can help your credit, as long as you make payments on time and build a good payment history.
If you have bad credit and need a car loan, we want to help. At Auto Credit Express, we’ve partnered with dealerships across the country with special financing departments. To see if there’s a dealer in your local area that might be able to lend a hand, fill out our free auto loan request form.